APL acquires customs broker Carmichael

Wednesday, November 21, 2012

APL Logistics has acquired the Southern California-based customs broker Carmichael International Service, the Singapore-based company said late Tuesday.
The acquisition caps a more than 20-year partnership between APL Logistics and Carmichael, with the companies forming a more formal strategic alliance nearly a decade ago.
It also fills a gap in APL Logistics’ service portfolio and provides it with “deep compliance expertise in important industry verticals,” the company said, giving customers "access to a truly seamless, end-to-end global 3PL solution from origin to
destination in one house."
“APL Logistics has always been really strong overseas in origin services, and in intermodal,” Tony Zasimovich, vice president of international logistics service for APL Logistics, said in an interview with American Shipper. “In 2001, we improved our contract logistics side. But one area where we were not as strong was customs house brokerage. We saw Carmichael International had a philosophy of customer intimacy that matched our philosophy. We had many joint customers – about 75 percent of our customers are the same. So we had discussions about joint customer needs.
“Back around 2003, we decided to take it to another level, and signed a formal strategic alliance. We had brokerage within the company, but these guys were so good, we appointed them to act on behalf of APL Logistics customs house brokerage. This relationship blossomed.”
Carmichael was founded in 1961 by industry icon Enrico Salvo, who turned the business over to his sons in the last decade. Salvo, however, still remains actively involved in the company, even publishing a regular and well-read newsletter on industry issues.
“It’s a family-owned business,” he said. “We always thought we would do something deeper. They liked the program, and also felt as we talked more seriously that as a pure broker, you’re a one-trick pony. They don’t have the global capability that customers are demanding and need today.
“Customers want the global player, they’ve gone more to strategic partnerships. So we felt the timing was right. Carmichael saw this too – they just didn’t have other services to offer. They quickly came around and said this does make sense.”
“Carmichael is proud to become part of the APL Logistics organization,” said John and Vincent Salvo, owners of the company, who will remain in APL Logistics after the acquisition.
“After 50 years of operating successfully as an independent company, we’re excited that our customers can now enjoy the full range of services offered by APL Logistics’ global network,” Enrico Salvo said.
Zasimovich said APL Logistics started envisioning an acquisition in early 2012.
“We hired an investment banker, we scanned the market, looked at other candidates,” he said. “It brought us back to what we already knew about Carmichael. They’re independent, they’re not tied to a trucking or ocean carrier. This is a company that lives and dies with customs entry, compliance, and has really strong relationships with their customers. We felt we were strong at origin, we decided we wanted these services in-house.”
APL Logistics will retain the Carmichael brand, and Zasimovich said nobody at Carmichael will be affected by the deal.
“The offices will continue – we want them to thrive and grow,” he said. “The brothers will stay, the key management staff will stay, the employees will remain. Our organizations knew each other very well. When their employees find out it’s APL Logistics, I think they’ll be relieved. We’re not hostile, we’re friendly. And they’ll be a subsidiary of APL Logistics.”
Carmichael has 200 employees in 10 U.S. offices, with its headquarters in Los Angeles. In addition Southern California, Carmichael operates in NewYork/New Jersey, Chicago, San Francisco/Oakland, Seattle/Tacoma, Miami, Boston, Atlanta, Savannah and Memphis.
Aside from offering customs brokerage, the company provides compliance training, compliance audits, and consulting work in the trade area. Carmichael also has some ocean and air freight forwarding services.
Zasimovich said Carmichael’s customer base is largely complementary to that of APL Logistics’, focused mainly on the garment, footwear, and apparel segments.
In other parts of the world APL Logistics handles its own customs, but the U.S. market is unique.
“Customs and transportation are more intertwined in rest of the world,” he said. “The concept of customs brokerage is not as common elsewhere. The U.S. importer is very concerned with their relationship with Customs. Customshouse brokerage is a strong standalone service here. Key companies want reputable organizations because so much rides on that Customs relationship. In other parts of the world, entry is important, but we tend to do it ourselves. Here it’s a bigger, more defined specialized service.”
He said APL Logistics' customers that have relationships with brokers other than Carmichael will be free to continue as they have.
“If a customer already has a broker today, that’s fine,” he said. “We’ll provide services at origin and destination as the customer wants them. And some of their customers they’ve had 40 to 50 years and they may use a different 3PL, and we aren’t going to disturb that.”
Financial details of the deal were not disclosed. - Eric Johnson